FEDERAL COURT OF AUSTRALIA

HECEC Australia Pty Ltd v Hydro-Electric Corp [1999] FCA 822

PRACTICE AND PROCEDURE – whether the applicant’s pleadings disclose a reasonable cause of action and cause or tend to cause prejudice, embarrassment or delay – circumstances where the amended application is to be dismissed on the ground that no reasonable cause of action was disclosed – whether it is reasonably arguable that the doctrine of unconscionability is only available in contractual or contract-type situations where commitment of disadvantaged party was procured by unconscionable conduct – when “may” means “must” in a statute – principles of promissory estoppel – causal nexus between damages and conduct contravening Trade Practices Act – anticipatory breaches of contract – whether damages only available after termination of contract – novation of contracts – duty of government to make decisions to accord with existing contracts and representations – presumed duty to afford procedural fairness – whether contrary to statutory intention – taking relevant considerations into account – Wednesbury unreasonableness

Trade Practices Act 1974 (Cth) ss 51AA, 51A, 52, 75B(1), 82, 87

Electricity Companies Act 1997 (Tas) s 10(2), (3)

Federal Court Rules O 6 r 9, O 11 r 6, O 20 r 2

Burton v Shire of Bairnsdale [1908] 7 CLR 76, applied

Blomley v Ryan [1956] 99 CLR 362, applied

Dey v Victorian Railways Commissioners [1949] 78 CLR 62, applied

General Steel Industries Inc v Commissioner for Railways (NSW) [1964] 112 CLR 125, applied

Finance Facilities Pty Ltd v Federal Commissioner of Taxation [1971] 127 CLR 106, referred to

Commercial Bank of Australia v Amadio [1983] 151 CLR 447, applied

Gould v Vaggelas [1985] 157 CLR 215, referred to

Commonwealth v Tasmania (The Tasmanian Dams Case) [1983] 158 CLR 1, referred to

Yorke v Lucas [1985] 158 CLR 661, discussed

Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] 162 CLR 24, referred to

Waltons Stores (Interstate) Ltd v Maher [1988] 164 CLR 387, referred to/discussed

Concrete Constructions (NSW) Pty Ltd v Nelson [1990] 169 CLR 594, referred to

The Commonwealth of Australia v Verwayen [1990] 170 CLR 394, discussed/followed

Annetts v McCann [1990] 170 CLR 596, applied

Wardley Australia Ltd v State of Western Australia [1992] 175 CLR 514, applied

Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] 182 CLR 51, referred to

Bevanere Pty Ltd v Lubidineuse [1985] 7 FCR 325, applied

Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd [1987] 14 FCR 215, referred to

Argy v Blunt & Lane Cove Real Estate Pty Ltd [1990] 26 FCR 112, referred to

Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] 37 FCR 526, applied

Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] 36 FLR 134, applied

Yorke v Lucas [1985] 80 FLR 143, discussed

H 1976 Nominees Pty Ltd v Galli & Anor [1979] 30 ALR 181, referred to

Pappas v Soulac Pty Ltd [1983] 50 ALR 231, referred to

Sutton v AJ Thompson Pty Ltd (in liquidation) [1987] 73 ALR 233, referred to

JS McMillan Pty Ltd v Commonwealth of Australia [1997] 147 ALR 419, applied

Australian Breeders Co-operative Society Ltd v Jones [1997] 150 ALR 488, applied

Kabwand Pty Ltd v National Australia Bank [1989] ATPR 40-950, referred to

Phoenix Court Pty Ltd & Ors v Melbourne Central Pty Ltd [1997] ATPR (Digest) 46-179, referred to

Pannizutti v Trask [1987] 10 NSWLR 531, applied

Wickstead v Browne [1992] 30 NSWLR 1; on appeal [1993] Leg Rep 522, applied

Earl of Chesterfield v Janssen [1751] 28 ER 82, referred to

Julius v Bishop of Oxford [1880] 5 App Cas, referred to

Halsbury’s Laws of Australia (1991)

Meagher et al Equity: Doctrines and Remedies 3^rd ed. (1992) chapter 17

Chitty on Contracts 27^th ed. (1994) at para 24-020

Carter et al Contract Law in Australia 3^rd ed. (1995) para 1906

Aronson et al  Judicial Review of Administrative Actions (1996) at pp. 467-8

Cheshire and Fifoot's Law of Contract (Australian edition) 7^th ed. (1997) at para 23.5

HECEC AUSTRALIA PTY LIMITED V HYDRO-ELECTRIC CORPORATION AND ORS

NG 634 OF 1998

THE HON JUSTICE MARCUS EINFELD AO

SYDNEY (heard in Canberra)

25 JUNE 1999

THE COURT ORDERS THAT:

1.             the motions of the respondents dated 19 and 26 October 1998 be dismissed

2.             the respondents pay the applicant’s costs

Note:    Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

INTRODUCTION

1                     HECEC Australia Pty Ltd (the applicant) is a provider of engineering and management services to the power, water and environmental protection industries in Australia and overseas.  By an amended application dated 6 July 1998, it has sued the Hydro-Electric Corporation (the HEC), a public enterprise constituted under Tasmanian legislation to generate, transmit, distribute and sell electricity in that State, three other Tasmanian representative parties (the Premier, who was also the Treasurer, the Minister for Energy and the State itself), and two new State-owned corporations, Aurora Energy Pty Ltd (Aurora) and Transend Networks Pty Ltd (Transend), (together, unless otherwise obvious or stated, the Tasmanian parties), under the Trade Practices Act and in law and equity for damages, injunctions and declaratory and other relief.  HEC Enterprises Corporation (HEC Enterprises) was a government business enterprise which provided technical services in the hydro-electricity field to the public and private sectors both at home and abroad using the expertise of the HEC, but upon the introduction of a major restructuring program which is at the centre of this litigation, and the commencement in business of Aurora and Transend, it was dissolved and ceased to exist.  Speaking generally enough for present purposes, HEC Enterprises did not employ its own staff or have its own premises but relied on the personnel and resources of the HEC to carry on its business.  It was originally joined as a party to these proceedings but was deleted in the amended application, apparently because at the relevant time it and its contractual obligations had been taken over or back by, or merged into, the HEC.

2                     An amended statement of claim was filed with the amended application, but by notices dated 19 and 26 October 1998 by the Tasmanian parties on the one hand, and the HEC on the other, the respondents moved for orders that the amended statement of claim be struck out.  In reliance on Order 11 rule 16 of the Federal Court Rules, all respondents alleged that the applicant’s pleading disclosed no reasonable cause of action and caused or tended to cause prejudice, embarrassment or delay.  The Tasmanian parties also relied on Order 20 rule 2 to seek a dismissal of the amended application on the ground that no reasonable cause of action was disclosed.  Aurora and Transend separately applied, although in the same notice of motion, for the dismissal of the case against them and also sought an order that they cease to be parties to the proceedings pursuant to Order 6 rule 9.  It is therefore necessary to consider the amended statement of claim in some detail.  For the purposes of the motions, it is of course assumed that the material facts alleged are true and would be proved at trial.

THE FACTUAL ALLEGATIONS

3                     In 1995, the HEC and HEC Enterprises decided that as part of the then mooted corporatised disaggregation of the HEC, a new company should be established, to be owned and controlled by senior staff of HEC Enterprises, to take over its business under an exclusive worldwide licence.  The intention was to keep the HEC’s expertise together and continue to develop and provide the expertise to all who sought it while freeing up the new company from the financial and other constraints which applied to government business enterprises.  Accordingly, in April 1995, the management and staff of HEC Enterprises was invited to submit a proposal for a management buyout, and in May, Taspower Pty Ltd (Taspower), a company consisting of the senior management of HEC Enterprises, made an offer.  After lengthy negotiations, the buyout was finalised on 11 January 1996 when a number of agreements were entered into by the parties (the agreements).  Three of them were amended on 14 June 1996.  On 26 July 1996, the agreements were assigned to the applicant which was majority owned by the owners of Taspower.  The relevant agreements were for 5 years from then with an automatic extension for a further 5 years subject to satisfactory performance.  Under the agreements, the applicant acquired the assets and business interests of HEC Enterprises, and the HEC gave the applicant an exclusive worldwide licence to provide and use a number of its services.  Part of the exclusivity was that the HEC agreed not to undertake any business activity, at any rate in the fields taken over by the applicant. 

4                     The applicant described its acquisition in paragraphs 39A and 39B of the amended statement of claim, further amended later, (statement of claim) thus:

39A.    Substantial entitlements of [the applicant] conferred by [the agreements] discretely and in combination comprised:

(a)          access to human resources and intellectual property of [HEC Enterprises] and  HEC relating to the generation, transmission and distribution of electricity and matters incidental and ancillary thereto including planning, consultation, construction, installation, operation and maintenance of electricity industry facilities for the duration of [the agreements]; and

(b)          the performance otherwise by HEC personally of the terms and conditions on the part of HEC contained in [the agreements] except in [a circumstance not now relevant]

39B.     By reason of the matter pleaded in paragraph 39A above, [the applicant] thereby acquired the consequential capacity and entitlement of [the applicant] to represent itself in the Australian and world market places as having such entitlement in terms of a vertically integrated HEC (inclusive of its offshoot [HEC Enterprises]), in the sense of integration of the functions and activities of generation, transmission and distribution of electricity, inclusive of the aspects thereof referred to in sub-paragraph (a) above.

5                     The total cost of the assets purchased was $2.42 million payable by instalments, the first of which was $1.5 million, plus annual licence fees for the exclusive right to market the HEC’s expertise totalling $1.9 million.  Moreover, subject to novation, the applicant agreed to carry on four existing contracts of HEC Enterprises.  Pursuant to the agreements, the applicant alleges that it has since provided a significant number of expert services in the power and water industries and employed more than 100 people in this work.

6                     On 10 April 1997 the Premier announced his Government’s decision to corporatise and disaggregate various elements of the electricity industry in that State and to pass a volume of legislation to achieve that result.  By these intended enactments, the State was to retain ownership of the dams used for and generators of electricity but to dispose of electricity distribution and transmission and its retailing.  The legislation would establish two new corporations, Aurora and Transend, of both of which the State would hold the shares, Aurora to take over electricity distribution and sale, and Transend to take over electricity transmission, in each case from the HEC, on 1 July 1998. 

7                     Immediately after the Premier’s announcement, the applicant sought information from the HEC on the practical implications for its position of the proposed reforms.  By letter dated 24 April 1997, the HEC replied to the applicant’s Managing Director as follows:

Re : Possible sale of the Hydro-Electric Corporation

Thank you for your letter of the 16^th April concerning the Premier’s Directions Statement paper.

At this stage there are a number of hurdles which must be cleared before the Premier’s proposals could be implemented, in full or part, and the timing of any implementation is therefore unknown.

I do not, at this stage, envisage any impact on the Hydro’s commercial relationship with HECEC Australia Pty Ltd flowing from the Premier’s proposals.  That relationship will of course be a consideration in any implementation process.

We will keep HECEC Australia Pty Ltd informed of any developments which may impact them [sic].

I would be pleased to meet with you to discuss these matters and those related to our recent visit to Manila.  Would you please arrange a suitable time with my secretary.

Yours sincerely

Daniel T Norton

Chief Executive Officer

8                     In June 1997 the Government established a Steering Committee to implement the restructure and make a range of important recommendations including on the future role and structure of the HEC.  The HEC occupied an influential even pivotal place on that Committee.

9                     On 15 October 1997, representatives of the applicant met with the Premier and made their concerns known.  The applicant alleges that the Premier responded:

I will follow up on your behalf and do what I can to see that your interests are acknowledged.  The disaggregation legislation will be introduced into Parliament shortly.  However, a contract is a contract and must be honoured.

10                  The Electricity Companies Bill (EC Bill) was introduced into Parliament on 22 October 1997, and the applicant alleges that six days later the Private Secretary to the Minister for Energy (the Minister) told the applicant’s General Manager, who had expressed further concerns about his company’s position in the event of the proposed reforms:

I am aware of your recent meeting with the Premier and want to assure you that your contracts will be honoured.

11                  On the same day, the applicant wrote to the Premier that the EC Bill did not guarantee the protection of its interests.  The Premier replied on 10 November 1997 acknowledging the applicant’s concerns that its rights and interests be preserved, confirmed earlier assurances that the applicant would be consulted about implementation arrangements after the EC Bill passed, and expressed the Government’s keenness to hold discussions with the applicant on the implementation of disaggregation.  The Premier’s letter stated that he had asked the Minister to meet with the applicant to establish the mechanism for these consultations.  At some stage the EC Bill passed the Lower House.

12                  The statement of claim then speaks of oral and written exchanges between the applicant and the Minister or his Private Secretary in mid to late November 1997 about the company’s views and concerns on the EC Bill, including certain proposals of the Government to amend the Bill to meet some of the applicant’s concerns.  Again the company was assured that extensive consultations would take place to achieve resolution of issues arising from the operation of the EC Bill on the applicant’s contracts with the HEC and HEC Enterprises.  In particular the Minister is said to have given three express undertakings:

1.         at least two months notice would be given before the intended dissolution of HEC Enterprises

2.         discussions would be held with the applicant about how current contracts with government business enterprises (presumably the HEC and HEC Enterprises) could be honoured

3.         every endeavour would be made to provide the applicant with advance Transfer Notices in draft as would affect the company’s existing contracts with these enterprises for the purpose of “comment and constructive discussion” prior to their presentation to the Treasurer for signature

13                  The so-called “Transfer Notices” were the means by which the assets and business of the HEC were to be transferred to Aurora and Transend.

14                  According to the statement of claim, the Minister was thereafter informed that the existing EC Bill did not address the applicant’s concerns and was supplied with the company’s legal advices.  Then on 4 December 1997 the Tasmanian Legislative Council considered and passed amendments to the EC Bill (the amendments) after being informed, so it is alleged, in the presence of representatives of the applicant, that the amendments were designed to allow the applicant to continue its existing contracts with the HEC and HEC Enterprises and to ensure that the HEC continued to be bound by its existing contracts including with the applicant.

15                  On 10 December 1997 the amendments were introduced into the House of Assembly.  During the debate the Minister is said to have described the amendments as intending to ensure that the HEC honoured its existing contracts and to give assistance and comfort to the applicant.  He stated that the Government accepted the amendments and they were passed, the Act receiving Royal Assent on 22 December [EC Act].  The statement of claim alleges that in consequence of the Parliamentary debates, the applicant “formed the belief that its concerns regarding the Government’s disaggregation proposals would be duly satisfied”.

16                  On 20 April 1998 the Minister wrote to the applicant advising of the proposed disaggregation of the HEC, including statements about the formation and proposed functions of Aurora and Transend, and of the proposed legislative timetable to commence on the following day.  Effectively the new arrangements were to commence on 1 July 1998.  He also advised the applicant that the Government was keen to ensure that the applicant’s work would continue so that Tasmania would be enabled to build on its reputation as an internationally recognised provider of technical services in the hydro-electric power industry.

17                  The statement of claim next states that the applicant immediately apprehended that the proposed scheme would operate to its severe disadvantage and would substantially alter its existing contractual arrangements to its significant detriment.  Accordingly it wrote to the Premier and the Minister seeking urgent advice of the Government’s intention to require the HEC to novate its existing obligations to the applicant and Aurora and Transend thereafter to meet these obligations.  It submitted a proposed Deed of Novation.

18                  On 30 April, representatives of the applicant met the Minister and his adviser.  They complained that there had been no apparent progress towards preserving the applicant’s contractual rights.  The Minister advised that the HEC had proposed retaining certain of the contracted activities or functions.  The applicant rejected this proposal and on 6 May wrote to the Premier stating that despite his assurances on 15 October 1997 that existing agreements would be honoured, the Government had still not given any indication that it was taking steps in this direction.  It sought an urgent meeting to discuss its fears that the Government did not intend to novate the two principal contracts to Aurora and Transend, pointing out that these agreements were vital to the applicant’s business.

19                  The statement of claim states that draft notices to transfer to Aurora and Transend the various properties and functions of the HEC were prepared in the week preceding 28 May 1998.  It is said that these drafts did not provide for the two companies to continue the HEC’s existing agreements with the applicant and were not disclosed to or discussed with the applicant prior to their public release.  The applicant believed that if the contents of the notices did not change, the disaggregation would have an “adverse impact” on the HEC’s relationship with the applicant.  Accordingly it sought the Government’s assurance that there would be novation and consultation.  In reply the Premier said that the future of the existing contractual obligations would be considered together with other disaggregation issues.

20                  Despite two letters from or on behalf of the applicant seeking information, undertakings and draft notices of the proposed transfers protecting the applicant’s contractual rights, the Premier announced on 12 June 1998 the proposed employment, asset and revenue profiles of the HEC, Aurora and Transend under the new arrangements, including significantly that the HEC would retain 650 employees and assets of $3 billion, and have a projected annual revenue of $300 million.  Obviously the HEC was to remain an important and powerful organisation carrying on major activities.

21                  Aurora and Transend were incorporated on 17 June 1998 and on 25 June the two notices transferring parts of the HEC’s business to them were gazetted.  The notices were not shown to or discussed with the applicant prior to their gazettal.  The statement of claim states that their effect was “to substantially and materially deprive” the applicant of its alleged contractual rights with the HEC, causing substantial damage and detriment to its future business earnings and capacities.  On the same day, the Premier told the applicant by letter that its contracts with the HEC would not be novated (“will stay with HEC”) or, presumably, honoured. 

22                  There has been an extensive array of particulars requested.  Some have been supplied.  Much of what has been requested and supplied is argumentative and distinctly unrevelatory of anything other than forensic, and no doubt expensive, point-making and point-taking.  Little of it clarifies the issues that arise on these motions. 

THE APPLICANT’S CLAIMS IN SUMMARY

Unconscionable Conduct

23                  The applicant alleges that the contents of the notices transferring elements of the HEC to Aurora and Transend were engineered and procured by the HEC and have a seriously adverse impact on the applicant because important aspects of the business of HEC Enterprises (and from 1 July 1998, of the HEC) which had been contracted to the applicant had been left with the HEC or perhaps passed to the two new companies without novation in favour of the applicant.  In either case there was no obligation to carry through the applicant’s alleged contractual entitlements.  This adverse impact is said to occasion or constitute serious loss and damage to the applicant including significant financial detriment.  This conduct of the HEC, expressed in various ways, was said to be unconscionable and as such to contravene section 51AA of the Trade Practices Act (TPA) and the “unwritten law of the State of Tasmania”.

Misleading and deceptive conduct

24                  The conduct was also said to involve representations which were misleading or deceptive or likely to mislead or deceive the applicant in contravention of section 52 of the TPA.  Reliance was placed on section 51A of the TPA in that the representations were generally as to future matters for the making of which there were said to have been no reasonable grounds.  The Premier and the Minister are said to have aided, abetted and/or been knowingly concerned in these contraventions by the HEC within the meaning of section 75B(1) of the TPA or involved in them within the meaning of section 87.

Contract

25                  The same actions leading to the same damage is said to found causes of action in contract based on breaches or anticipatory breaches.

Unlawfulness

26                  The notices of transfer to Aurora and Transend are alleged to be invalid or unlawful in that they were in breach of the EC Act by not novating the HEC’s contractual obligations to the applicant.

Invalidity

27                  A number of administrative law assertions are also made in favour of this argument including that the Premier omitted to take relevant considerations into account in his decision to issue or cause to be issued the notices in that form, that his decision to do so was so unreasonable that no reasonable person in his position would have issued them, and that the applicant was denied procedural fairness.

Promissory estoppel

28                  The statement of claim also contains a claim based on promissory estoppel in that the various representations of the Tasmanian parties are said to have led the applicant to assume, believe and expect that they would carry out their promises, that the applicant acted upon that belief, that the promises were not kept, and that the Tasmanian parties knew that the applicant would sustain loss and damage in that circumstance.

THE MOTIONS

29                  Some of the arguments on the separate motions had great similarities.  A few were identical.  I shall not deal with them separately but will seek to cover all of the same or similar contentions together.  The first, common to both motions, is the alleged failure of the amended statement of claim to disclose a reasonable cause of action under any of the headings relied on.

30                  Order 11 rule 16 provides for the striking out of a statement of claim which discloses no reasonable cause of action or which has a tendency to cause prejudice, embarrassment or delay in the proceedings.  To meet the requirements for disclosure of a reasonable cause of action, a statement of claim must state material facts which support each claim made: H 1976 Nominees Pty Ltd v Galli & Anor [1979] 30 ALR 181.  No cause of action has been pleaded against Aurora and Transend which have only been included because they will be affected by any relief granted.

THE CAUSES OF ACTION

Unconscionable conduct

31                  The first of the causes of action promoted is unconscionable conduct.  Although there are separate allegations under statute and in equity and common law, the claims are the same: see Explanatory Memorandum to the Trade Practices Legislation Amendment Bill 1992 which when it passed into law introduced section 51AA into the TPA.  That section forbids corporations from engaging in conduct in trade or commerce that is unconscionable within the unwritten law of the States and Territories.  Because of the position of the High Court in the Australian legal system, the “unwritten”, ie non-statutory, law of the States and Territories is the same.  Thus the section embraces, inter alia, the concept of unconscionable conduct addressed by the High Court in Blomley v Ryan [1956] 99 CLR 362 and Commercial Bank of Australia v Amadio [1983] 151 CLR 447.  In Blomley, Fullagar J said at 405 that although it is not possible to give an exhaustive statement of circumstances which will qualify for unconscionable conduct, “[t]he common characteristic [of them all] seems to be that they have the effect of placing one party at a serious disadvantage vis a vis the other”.

32                  In Amadio, Gibbs CJ said at 459:

A transaction will be unconscientious within the meaning of the relevant equitable principles only if the party seeking to enforce the transaction has taken unfair advantage of his own superior bargaining power or of the position of disadvantage in which the other party was placed.

33                  Mason J said at 461 that:

…. relief on the ground of ‘unconscionable conduct’ is usually taken to refer to the class of case in which a party makes unconscientious use of his superior position or bargaining power to the detriment of a party who suffers from some special disability or is placed in some special situation of disadvantage.

34                  At 462, Mason J said that he used the adjective “special” to qualify “disadvantage” to highlight 3 elements:

1.        that the principle does not apply in every circumstance of difference in the bargaining power of the parties

2.        that the disabling circumstance must seriously affect the ability of the affected party to make a decision on the subject matter which is in that party’s best interests

3.        that the other party must or ought to have known of the existence of the disabling circumstance and of its effect on the affected party

35                 See also Deane J at 476 citing McTiernan J in Blomley who quoted at 392 the ancient authority of Earl of Chesterfield v Janssen [1751] 28 ER 82 (Lord Hardwicke at 100) that the concept was “taking surreptitious advantage of the weakness, ignorance or necessity of another.  The essence of such weakness is that the party is unable to judge for himself.”

36                  The HEC argued that the applicant has made a simple allegation of “disparity of bargaining power” as the disadvantage and that this claim is insufficient to come within the Amadio principle. 

37                  The allegation actually made by the applicant in this connection is that there was an

… absence of any reasonable degree of economic and operational equality between [the applicant] and HEC by reason of HEC’s vastly superior economic power to that of [the applicant], and HEC’s vastly superior operational strength to that of [the applicant] attributable to its ownership and control directly or indirectly by [the Tasmanian parties], and to a unique infrastructure and asset base exclusively established by statute (para 72(h) of statement of claim).

38                  Taken with the rest of the pleading and obvious implications, this allegation amounts to factual complaints that the HEC:

·        knew that the original proposed privatisation or corporatisation would greatly change its own structure, strength and activities;

·        nevertheless assured the applicant that the industry restructure was not intended to impact adversely on the applicant;

·        undertook to inform the applicant if that position changed;

·        allowed, even encouraged, the applicant to proceed right through the period from commencement of the proposal to Royal Assent for the legislation in the belief that its interests would be protected;

·        during this period actively participated in the disaggregation process and in formulating advice to the Government on the matter without advising the applicant;

·        recommended on 4 December 1997 changes to proposed amendments to the EC Bill which afforded less protection to the applicant’s commercial interests than had existed up to that date;

·        proposed to the Minister prior to 30 April 1998, without notice to the applicant, that at least one of the agreements remain with the HEC and not be novated to Aurora and Transend;

·        without disclosure to the applicant, provided written comments on draft transfer notices which did not provide for the novation of the agreements;

·        was responsible for the content of the final Transfer Notices which it did  not convey to the applicant in advance of their gazettal;

·        knew that the Parliament intended the scheme to permit the applicant to enjoy its full entitlements under the agreements;

·        yet broke its promises completely, thereby knowingly causing the applicant serious losses and damage.

39                  This conduct is said or implied to have been an unconscionable use by the HEC of:

1.      its greatly superior economic strength to the applicant;

2.      its long established existence as a powerful statutory authority with considerable capacity to influence Government and government policy;

3.      its unique capacity to cause financial and other detriment to the applicant, even to the point of destroying its business completely, through its economic, administrative and political power;

4.      its intimate involvement with Government at all stages of this reform process including in the formulation and content of the legislation and the Transfer Notices;

5.      its capacity to keep, and influence the Government to keep, the final steps and processes absolutely secret from the applicant, so as to ensure that the applicant was as uninformed as possible until it was too late for it to do anything to protect itself;

6.      its knowledge that because of its great economic power and strength and the applicant’s comparative economic vulnerability, it could succeed in the end because the applicant would be weakened if not destroyed financially before it could move to address the situation thereby created; and

7.      its ability to manipulate the restructuring agenda so as to cause maximum difficulty to the applicant and maximum advantage to itself.

40                  The examples of persons who may be held to have a “special disability” given by Fullagar J over 40 years ago were all referable to individuals, not corporations, especially small enterprises such as the applicant.  No corporation can be spoken of in terms of elements such as illiteracy, age, infinity of body or mind, drunkenness (Blomley at 401), or such matters as the need for translation into another language of contractual obligations about to be undertaken.  Mason J said in Amadio at 462 that these types of situations are only particular examples

of an underlying general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis a vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created.

He went on to say in effect that the circumstances attracting the doctrine cannot be fully enumerated because as times change, new situations evolve which may attract the underlying principle.

41                  The HEC contended that the “unconscionable conduct” doctrine presupposes or is dependent on dealings or transactions between the parties.  It pointed to the allegation of unconscionability in the content of the Transfer Notices and said that the Notices do not amount to a transaction entered into by the applicant due to the HEC’s conduct referred to, but are the product of activity by the HEC and the Tasmanian Government and legislature.

42                  The present question for determination raised by these submissions is therefore whether it is reasonably arguable that the availability of the doctrine is not limited to contractual or contract-type situations where the disadvantaged party’s commitment has been procured by the unconscionable conduct.  In my view this must be so.  The facts of this matter are and will be complex.    The applicant will no doubt seek to offer evidence at the trial that in Tasmanian terms, the HEC is a unique and powerful organisation : Commonwealth v Tasmania (The Tasmanian Dams Case) [1983] 158 CLR 1.  If this evidence is accepted and the applicant is also able to produce evidence to support its factual complaints including of the HEC’s promises to it, and of the HEC’s significant role in the formulation of the Transfer Notices and in the Government’s refusal to require the novation of the agreements, and of course if it can show loss, it seems to me that there is an arguable if controversial case of unconscionable conduct whether by statute or in law or equity.

43                   The HEC did not argue, and there is nothing in the authorities which suggests to me, that the doctrine of unconscionability cannot apply in favour of small corporations vis a vis governments and large and powerful government monopolies.  Accordingly, as it seems to me, it is at least arguable that the principle will be available for example where a disadvantaged party including a company declines to enter an apparently beneficial contract due to a superior party’s, including a government’s, or a government enterprise’s or agency’s, unconscionable conduct.  By the same token, if a much weaker party, including a company, fails to take a step to protect its own interests by reason of unconscionable conduct by a much stronger party and as a consequence suffers irreversible damage, there must arise a real possibility that the doctrine will deliver relief.  By definition there will be no rights in contract and there may be no semblance of trade or commerce such as to found proceedings under the TPA.  It would be odd if unconscionability was not at least arguably justiciable in such circumstances.

44                  For present purposes, it is not necessary for me to decide the matter finally.  All that is necessary at this time is to determine whether the point could be respectably argued if all the applicant’s allegations are proved.  For the reasons given, I believe that it is.

45                  The Tasmanian parties alleged a failure of the statement of claim to plead facts establishing a relevant disability, the unconscientious taking advantage of the disability, the obtaining of a benefit thereby, and causation of loss of reason of the impugned conduct.  The explanatory outline given in paragraphs 38 to 40 of this judgment is sufficient to dispose of these contentions.

46                  They next submitted that in any event, no relief under section 87 is available unless loss or damage has been suffered by reason of the unconscionable conduct or could have a relationship to or provide compensation for the alleged detriment.  They submitted that none of the alleged detriment could have been caused by the unconscionable conduct.  These contentions were not elaborated or explained.  All I can say is that in my view, they do not raise issues for determination on these motions.

47                  Finally the Tasmanian parties contended that the pleading of the alleged detriment is “embarrassing”.  No reasons, explanations or particulars were given for the submission and I reject it.

Misleading and deceptive conduct

48                  Omitting for convenience the statutory and conceptual refinements as between the perpetrator of and an accomplice in the alleged conduct, the relevant facts relied on by the applicant are in substance:

1.      representations were made in and by the HEC’s letter of 24 April 1997 in trade or commerce

2.      it was not then envisaged that the restructure would have any impact on the applicant

3.      the applicant would be informed if there was a change in that position

4.      the existing commercial relationship between the applicant and the HEC would be “a consideration” in “the implementation process” of the restructure

5.      the HEC would keep the applicant informed of any developments which might adversely impact upon it

Representations

49                  The Premier and the Minister argued, but the HEC did not, that the letter of 24 April 1997 is not capable of conveying the alleged representations.  I have taken it that this assertion is that the letter did not in truth make the representations alleged.  No argument was put in support of the assertion and I reject it.  The true construction of the letter is a matter for trial, not summary relief.  The representations are said to have been misleading and deceptive or likely to mislead or deceive in that they were not honoured.

Trade or commerce

50                  The Premier and the Minister argued, but the HEC did not, that its alleged conduct was not in trade or commerce.  They contended that the alleged conduct related not to “activities or transactions which, of their nature, bear a trading or commercial character”: Concrete Constructions (NSW) Pty Ltd v Nelson [1990] 169 CLR 594, but to what they called “matters of ministerial decision-making or HEC performing its statutory duties or acting in furtherance of Government policy”.

51                  It is my present view that the alleged conduct was in trade or commerce.  It is certainly arguably so.  The representations made by the letter of 24 April 1997 from the HEC’s Chief Executive Officer to the Applicant’s Managing Director concerned the practical and commercial implications of the Government’s restructure of the electricity industry in Tasmania for the existing contractual relationship between these enterprises.  The undertakings in the letter were clearly ‘commercial arrangements’ as conceived by Bowen CJ in Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] 36 FLR 134, approved by a Full Court of this Court in Bevanere Pty Ltd v Lubidineuse [1985] 7 FCR 325 at 330.  Justice Emmett has recently collected a number of cases on the subject in JS McMillan Pty Ltd v Commonwealth of Australia [1997] 147 ALR 419.  It will be at the lowest a question of fact at the trial as to whether the letter was written in trade or commerce.  It is not a ground for striking out the entire claims under the TPA.

Reliance

52                  Both the HEC and the Tasmanian parties correctly argued that:

1.      in the requirement of section 82 that the essence of a claim for damages under the TPA is that loss be sustained “by” the offending conduct, well-hallowed authority has discerned a normal need for a causal or reliance link between the two; and that

2.      in the applicant’s amended statement of claim there is no specific averment of causation, reliance or inducement.

53                  Referring to the applicant’s claim for damages for the time of two of the applicant’s senior executives who were from April 1997 onwards allegedly “engaged virtually full time in purported protection of [its] interests under [the agreements]”, the Tasmanian parties contended that the applicant could not have relied on the HEC’s representations because it was informing itself of developments at all relevant times.  In the present context, this contention is simply argumentative.  It may be open to put this proposition to the applicant’s executives in cross examination at the trial and to base a submission to this effect on their answers, but it cannot be a ground for summary dismissal or strike out.

54                  The HEC contended that it was presumably not accidental that the pleading was deficient in these respects because if the applicant had in fact relied on the representation made to it, it would not have suffered the loss alleged.  Moreover, the HEC argued that in any event any reliance ceased when further assurances of protection were sought.  It therefore submitted that the claim was fundamentally flawed and must fail.  In response, the applicant said that in a case where future conduct is being relied on, the usual concept that the loss be occasioned because the victim was induced by the offending conduct to act to his detriment is inapplicable.  Only when the promises as to the future are not withdrawn or corrected, or kept, do they become misleading and deceptive.  That is the time when the link between the loss and the conduct is to be established and that time in this case was when the Transfer Notices were gazetted.  The forerunners to the present form of application and statement of claim were filed immediately thereafter.  The applicant’s claimed link between the conduct and the damage appears to be that in reliance on the representation as to the future, it pursued or refrained from a course of action which, when the representations were replaced by contrary actions and thus became misleading and deceptive, caused loss which would not have been sustained had they been honoured.

55                  The cases are at pains to emphasise that the formulation of damages claims under section 82 will be as varied as is the multiplicity of statutory contraventions which can give rise to them.  Although evidence of causation/reliance/inducement will normally be required : Pappas v Soulac Pty Ltd [1983] 50 ALR 231; Gould v Vaggelas [1985] 157 CLR 215; Sutton v AJ Thompson Pty Ltd (in liquidation) [1987] 73 ALR 233; Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd [1987] 14 FCR 215; Kabwand Pty Ltd v National Australia Bank [1989] ATPR 40-950; Argy v Blunt & Lane Cove Real Estate Pty Ltd [1990] 26 FCR 112, the rules applicable to the establishment of the necessary link should not be regarded as inflexible.  In Wardley Australia Ltd v State of Western Australia [1992] 175 CLR 514, Mason J said at 525 that determining the measure of damages under section 82 in a particular case requires a thorough analysis of the provisions applicable to the particular statutory cause of action.  In Janssen-Cilag Pty Ltd v Pfizer Pty Ltd [1992] 37 FCR 526 at 529, Lockhart J said that the circumstances in which damage from contravention of the TPA may arise will vary considerably from case to case.  So long as the contravener’s conduct is the real, direct or effective cause of the victim’s loss, it will have been brought about “by”, meaning ‘by virtue of’, the contravening conduct.  This concept was adopted by a Full Court of this Court (Wilcox, Lee and Lindgren JJ) in Australian Breeders Co-operative Society Ltd v Jones [1997] 150 ALR 488 which involved a claimed loss by investors in a horse breeding operation where there was no evidence of reliance by the investors on the promoter’s valuation of the investment.  The Full Court described the need for evidence of reliance leading to loss as “typical” of section 52 claims but that it is not the only situation of availability of a claim.  See also Phoenix Court Pty Ltd & Ors v Melbourne Central Pty Ltd [1997] ATPR (Digest) 46-179 and the cases therein cited.

56                  Although the applicant’s method of pleading its claim in these regards is not usual, it is in my opinion not demurrable.  It is not obviously untenable, as provided inter alia by General Steel Industries Inc v Commissioner for Railways (NSW) [1964] 112 CLR 125 at 129-30, Dey v Victorian Railways Commissioners [1949] 78 CLR 62 at 84, Pannizutti v Trask [1987] 10 NSWLR 531 at 536, and Burton v Shire of Bairnsdale [1908] 7 CLR 76 at 92.  See also the High Court’s endorsement at [1993] Leg Rep 522 of the minority view of Kirby P in Wickstead v Browne [1992] 30 NSWLR 1 at 5.  Nor is it illogical or incomprehensible.  The same allegation is actually made in paragraph 88 of the amended statement of claim albeit in the claim based on promissory estoppel where the reliance is said to have caused a delay in the commencement of legal proceedings, presumably to stop the gazettal of the Transfer Notices or delay their taking effect. 

57                  The Tasmanian parties argued that no damage could flow from any such delay.  No reasons were given for this submission.  As a matter of arguability, I disagree.  As pleaded and argued by the applicant, there seems to be a clear basis for finding a causal nexus between the alleged misleading conduct and the lost opportunity to avoid damage.  There is much room for contending that the pleading requires amendment now that further time has passed since the gazettal of the Transfer Notices, and further particulars are likely to be appropriate.  But in my opinion no case has been made for striking out the whole of the claim.

Accessorial liability

58                  The applicant’s assertion against the Premier and the Minister is that either or both aided and abetted, and were knowingly concerned and involved in the HEC’s misleading and deceptive conduct.  An important element of this allegation is that they had or ought to have had knowledge of the facts alleged to found the contraventions.  These respondents argued that the “either or both” pleading is embarrassing, that it fails to allege a complete cause of action against both respondents, and that each is entitled to a separate specification of the claim he has to meet.  Citing Yorke v Lucas [1985] 158 CLR 661, they submitted that actual knowledge must be proved and that this pleading which alleges actual and constructive knowledge is deficient.

59                  This argument cannot be accepted.  Firstly, technical defects in a pleading which cause no confusion and do not raise issues of substantive principle are dealt with by particulars or amendment, not motions for summary dismissal.  These identified defects, if they be defects at all, are in that category.  More significantly, Yorke v Lucas is not authority for the proposition advanced.  The decision of the Full Court of this Court, (Bowen CJ, Lockhart and Beaumont JJ) in the case, reported at [1985] 80 FLR 143 at 152-3, was that the accessory must “actually or constructively be aware of the elements constituting the contravention”.  This view was upheld by the High Court at 670-1 (per Mason ACJ, Wilson, Deane and Dawson JJ).

Contract

60                  Although this section of the statement of claim is headed “Claims based on breach and anticipatory breach of contract”, presumably by the HEC, the essence of the contract claims is to be found elsewhere in the document.  The applicant’s case is that the agreements were entered into in January, June and July 1996 and that there was significant performance of them.  After a series of events in the following 2 years which the applicant submitted amounted to “much dissembling” by the HEC and the Tasmanian parties, the applicant claims that the agreements were ultimately breached on 25 June 1998 with the gazettal of the Transfer Notices not providing for the novating of the agreements by the HEC or their honouring by anyone.  These breaches of contract are said to have led to loss and damage to the applicant.

61                  Under this heading, the applicant “apprehends” what is called “a substantial reduction in further observance and performance” of the agreements by the HEC, from which the applicant claims to have suffered and to be likely to suffer damages.  The statement of claim alleges that this apprehended (anticipated) breach of contract, which, it is said, will be procured by the Tasmanian parties, will occur unless the HEC and the Tasmanian parties ensure that Aurora and Transend are given and carry out the HEC’s obligations to the applicant under the agreements.  If so, the applicant will suffer substantial continuing loss and damage. 

62                  Relying on the definition of ‘anticipatory breach of contract’ provided by Halsbury’s Laws of Australia (110-8200), headed “Forms of Breach”, viz:

An anticipatory breach arises where, prior to the time appointed for performance by the promisor, the promisee justifiably terminates the performance of the contract for the promisor’s repudiation or inability to perform.

the HEC submitted that the applicant has not pleaded a breach of the agreements by a repudiation of or failure to perform the agreements nor has it terminated the agreements and pleaded anticipatory breach.   Therefore, the HEC says, the claim is fundamentally flawed.

63                  On the other hand, the Australian edition of Cheshire and Fifoot (7^th Ed) at para 23.5 says that it is not clear why damages for anticipatory breach can only follow termination of the contract.  The authors say that the requirement of termination is inconsistent with the acknowledged right of a party to sue for specific performance following anticipatory breach.  They state further that there will be circumstances where the victim of an anticipatory breach will be entitled to affirm the contract while preserving the right to sue for damages.

64                  It is not appropriate on an application for strike out to decide such interesting if quaintly esoteric questions.  The pleading alleges that the anticipatory breaches date from 1 July 1998 and that the losses commenced then, continue now, and will stretch into the future.  Thus the applicant’s allegation is that although a victim of the expected breaches, it wishes nevertheless to maintain the agreements, and to seek damages without first being required to repudiate.

65                  The substantive answer to the HEC’s argument is far from clear.  Certainly this claim is not of the kind referred to in Halsbury or in the cases gathered by Cheshire and Fifoot.  Chitty on Contracts 27^th Ed para 24-020 and Carter and Harland’s Contract Law in Australia 3^rd edition para 1906 add more learning to the subject without resolving the issue raised.  In my opinion, however, while the HEC’s argument throws significant doubt on the claim, it does not make out a sufficiently definitive case for striking it out of the pleading.

66                  The Tasmanian parties described this claim, and the alternative claim that loss will follow from a failure by them to ensure that Aurora and Transend carry out the obligations of the HEC to the applicant under the agreements, as “embarrassing”.  They did not say, and I cannot see, how or why.  As to the alleged apprehended breach of contract, the Tasmanian parties said that instead of the global reference to conduct pleaded in more than 30 separate paragraphs of the statement of claim, the statement of claim must identify which particular facts are relied on to ground each claim made.  If so, it is a matter for particulars or amendment, not for strike out.   As to the alternative claim, the Tasmanian parties submitted that no basis for their suggested obligation to procure compliance from Aurora and Transend is shown or alleged. 

67                  The point was also taken that the State of Tasmania, although made a party and said to be liable under this heading, is not identified as having played any relevant part in the matter.  I confess not to understand why the State of Tasmania was made a party to this application at all, and what claims or relief will affect the State as a distinct entity.  But that question can be raised and dealt with at a directions hearing or determined at the commencement of the trial.  It does not warrant any order at this stage of the proceedings. 

68                  The rest of the submission either is an exercise in point-taking or manifests a misconception of the claim.  Although some further particulars and amendment may be appropriate, I do not see how the pleading is “embarrassing” to the Tasmanian parties.  For my part, the statement of claim is replete with explanations of how the obligation of the Tasmanian parties to procure compliance by Aurora and Transend with the HEC’s suggested obligations to the applicant is said to arise.  It will be a matter for the trial Judge as to whether it succeeds.

Unlawfulness and invalidity of Transfer Notices

69                  The applicant’s first claim is that the Treasurer was bound by section 10(2) of the EC Act to include provision in the notices transferring the HEC’s operations to Aurora and Transend for the effective novation of the agreements to those companies in favour of the applicant.  If the subsection confers only a discretion on the Treasurer to do so, the applicant argues that his failure to exercise the discretion in favour of the applicant’s position was unlawful or invalid because

1.      he failed to  have regard to the relevant considerations that:

(a)    the agreements are contracts falling within section 10(2) and ought to have been included

(b)   the failure to ensure that the Transfer Notices effected novation of the agreements would expose the HEC to liability for breach of contract

(c)    the inclusion of novation is the only way the Tasmanian parties could honour their prior assurances and undertakings

(d)   the amendments to the EC Bill passed on 10 December 1997 were intended by the Parliament to preserve the full existing contractual entitlements of the applicant

2.      no reasonable person in the Treasurer’s position could have excluded novation of the agreements in the Transfer Notices

3.      he denied procedural fairness to the applicant because

(a)    the applicant held a legitimate expectation that meaningful discussions would be held on the means of maintaining and honouring the applicant’s existing contractual rights and benefits after disaggregation took effect and that it would be provided with drafts of the Transfer Notices for the purposes of constructive discussion prior to their execution and gazettal,

(b)   the Premier was under an obligation to afford the applicant procedural fairness, but

(c)    he did not cause such meaningful discussions to take place and such draft Transfer Notices to be provided.

70                  The Tasmanian parties put forward, but did not develop, an argument that the statute does not impose a duty on the Treasurer of the kind alleged by the applicant.  As to the discretion, the Tasmanian parties asserted that in accordance with the views of the High Court in Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] 162 CLR 24 at 40, an unconfined statutory discretion will only permit of a “relevant considerations” attack if the subject matter, scope and purposes of the Act give rise to an implication that the decision-maker is bound to take into account the matters relied on.  No specific argument was put against the Wednesbury unreasonableness claim.  The need for procedural fairness was said to be excluded by section 10(3) of the EC Act.

71                  In my view, the presumed though unstated consequential submission of the Tasmanian parties that the applicant’s case on these causes of action is without merit must fail.  As to the section 10(2) argument, the applicant’s assertion and the Tasmanian parties’ response merely raise an issue of statutory construction.  The issue raised by the submission is whether the legislative scheme was intended to require that the HEC honour its contractual obligations to the applicant.  It is inappropriate to attempt to answer that question now.  The subsection provides:

The Treasurer, by notice published in the Gazette, may –

(a)      transfer any, or any part of any, operation, property, right or liability of the Hydro-Electric Corporation to the Crown or a company (whether or not that transfer is for a consideration); and

(b)      specify the value of any operation, property, right or liability so transferred; and

(c)      specify conditions relating to that transfer; and

(d)      specify the contracts made or entered into by Hydro-Electric Corporation before the transfer day, or parts of such contracts, that –

(i)            have not been discharged or performed by that day; and

(ii)          are or are  not related to any operation, property, right or liability so transferred; and

(e)      specify the manner in which a contract, or part of a contract, referred to in paragraph (d) applies with respect to the transfer recipient; and

(f)       provide for any matter that is incidental to that transfer.

72                  There is an abundance of authority that the word “may” sometimes denotes “must” and gives rise to an obligation to do what is provided for: Julius v Bishop of Oxford [1880] 5 App Cas 214 at 222-3; Finance Facilities Pty Ltd v Federal Commissioner of Taxation [1971] 127 CLR 106 at 134-5; Commissioner of State Revenue (Vic) v Royal Insurance Australia Ltd [1994] 182 CLR 51 at 84-5.

73                  This question is to be decided in the light of the particular statute construed according to the apparent legislative intention and the rules of statutory construction.  The facts may well bear on its determination.  It will rarely fall to be determined on a motion for summary relief as evidence will often assist in the construction to be given. 

74                  It is my opinion that the submissions of the Tasmanian parties concerning the relevant considerations allegedly not taken into account are not in point.  The basic facts underlying the applicant’s assertions were not challenged – ie. that the agreements fall within section 10(2), that the Transfer Notices did not novate the agreements, that the alleged assurances and undertakings were given, and that Parliament intended that the HEC’s contractual obligations to the applicant be honoured.  Accordingly the Peko-Wallsend reference is not relevant to the resolution of this matter because the trial Judge will have to decide the subject matter, scope and purposes of the EC Act and whether they give rise to the implications sought.  Without evidence and full argument, the Court cannot, and is not permitted to, determine those questions on these motions.

75                  The proffered defence to the Wednesbury claim was an unelaborated statement that the matters pleaded do not disclose a reasonable cause of action.  Effectively this point was not seriously argued.  It need be answered only by the decision that if the matters pleaded are proved, the claim is available and arguable.

76                  The assertion that section 10(3) of the EC Act operates as a statutory bar to the claim of denial of procedural fairness raises a challenging question of statutory construction.  The subsection provides:

The Treasurer must not make a transfer notice unless he or she has first –

(a)      provided the Hydro-Electric Corporation with a draft of that notice; and

(b)      allowed the Hydro-Electric Corporation reasonable opportunity to provide the Treasurer with written comments in respect of the draft notice.

77                  The argument of the Tasmanian parties implies that the provision of these express procedural requirements amounts to an exhaustive code to which all other considerations are foreign.  Annetts v McCann [1990] 170 CLR 596 is recent authority that the duty to act fairly in administrative decision-making affecting rights, interests and legitimate expectations will, in the absence of a clearly contrary statutory intention, be presumed.  There are many other similar statements.  Aronson and Dyer summarise the case law in Judicial Review of Administrative Actions (1996 edition) at pages 467-8:

It appears then, that the presence of express procedural requirements will not normally, of itself, exclude or limit the application of natural justice.  The ‘procedural code’ argument now rarely succeeds, except in cases involving ‘multi-stage’ decisions which raise other issues, or where other factors necessarily imply that natural justice is excluded or limited.  This makes sense, in our view.  In most cases where Parliament lays down express procedural requirements, it does so to set a minimum standard, or to highlight particularly important procedural requirements.  That does not mean the presence of express procedural requirements has no effect on the application of natural justice.  On the contrary, such requirements may provide useful indications as to what procedures are likely to be appropriate.  But that should be a matter of content, not exclusion.

Whether the EC Act manifests a clear contrary intention to the presumed duty to afford procedural fairness is a matter for the trial, not for interlocutory decision.  It is certainly arguable that it does not.

Promissory estoppel

78                  This claim by the applicant relies on the same alleged oral and written representations and promises of the HEC and the Tasmanian parties referred to under other causes of action.  Believing up to the receipt of the Premier’s letter of 25 June 1998 that these parties would carry out their promises, the applicant says that it delayed commencing legal proceedings, inter alia, to stop the gazettal of the Transfer Notices.  Because the respondents failed to carry out their undertakings, and the applicant did not commence proceedings, it has suffered and will continue to suffer loss.  It seeks equitable damages.

79                  In The Commonwealth of Australia v Verwayen [1990] 170 CLR 394, the High Court held that the principle of estoppel will permit a claim for loss suffered by a party who has sustained a detriment as a result of reliance on the correctness of an assumption induced by the actions or words of another.  As in relation to the claim for misleading and deceptive conduct, the HEC argued that if the applicant had in fact relied on the assumptions or beliefs as to the truth of the representations, it would not have suffered the damage alleged.  It said that the damage in this case occurred when reliance on the representations ceased which occurred when and because the applicant sought additional and later assurances that it would be protected, and thus demonstrated that it did not rely or was no longer relying on the original or earlier oral and written statements.

80                  So far as they are said to ground a strike out of the claim, I reject these submissions.  In the reality of commercial experience, a party who has been relying on promises might, while still relying on them, nevertheless seek confirmation or reassurances that the promises will be kept.  If the applicant had not done so here, it is not unlikely to have been criticised for commercial naivete or worse by sitting back on its original assurances of protection by others and doing nothing to protect itself.  These contentions raise an issue to be litigated at trial, not to be decided without evidence on a motion for summary dismissal.

81                  The Tasmanian parties argued, on the authority of Waltons Stores (Interstate) Ltd v Maher [1988] 164 CLR 387 at 428-9 (Brennan J), that in order for a promissory estoppel to be found, the applicant would have to comply with a complex set of factual criteria.  It is not necessary, indeed I have not found it possible, to recount intelligibly here all of those proposed.  They depend upon a suggested requirement that “a legal relationship” must, or be assumed to, have existed, or be anticipated to exist, between the applicant and the Tasmanian parties.  Such a relationship is not pleaded here but it is clear from Verwayen, in which the High Court revisited Waltons Stores, that this allegation is not essential and may not be necessary to a claim for equitable estoppel : see also Meagher, Gummow and Lehane, Equity Doctrines and Remedies 3^rd edition chapter 17.

82                  The Tasmanian parties’ submissions on this claim also depend on an assertion that the inducement of the applicant to adopt the assumption must be expressly pleaded.  On the facts and for the reasons given earlier in relation to other causes of action pleaded concerning

(a)      the alleged representations and promises of the Tasmanian parties,

(b)     the applicant’s beliefs and expectations that they would be honoured,

(c)      the applicant’s suggested reliance upon them, and

(d)     the actual and constructive knowledge of the Tasmanian parties in this connection,

I think that the required inducement, as alleged by the applicant, is adequately identified.  Again an amendment may be required but the pleading is not fundamentally flawed and the cause of action not shown to be hopeless.

83                  The Tasmanian parties also attack the claim for damages under this heading.  They say firstly that no claim for damages can be made “in respect of” promissory estoppel.  No reason was given and no authority was cited for this bald statement.  There is no apparent reason why loss sustained as a consequence of events on which an equitable estoppel is found should not sound in equitable damages.  There were many statements in Waltons Stores and Verwayen on matters akin to damages such as “detriment” and “restitution”, and it is now well settled that estoppel may operate not only as a “shield” but as a “sword” : Meagher, Gummow and Lehane at para 1713.  This concept would have little meaning or practical effect in many cases if damages were not awardable.

84                  As mentioned earlier in another connection, the act of reliance alleged in the statement of claim is delay in seeking (it is, in truth, not seeking) injunctive relief against the gazettal of the Transfer Notices.  The detriment is said to be and have been uncertainty in the applicant’s business planning, security, commitments and future directions, loss of the purchase price of the business and assets of HEC Enterprises, and loss of the time of the executives who worked on restructure issues and problems.  The Tasmanian parties submitted that none of this detriment is causally connected to the non-commencement of injunction proceedings or bears any “correlation to the alleged representations”.

85                  The applicant claimed that the suggested nexus in each case is a rational conclusion to draw from the facts alleged, and I must say that a fair reading of the statement of claim suggests that this description is at least arguable and may be correct.  However, it is only necessary for present purposes to hold that these submissions essentially raise questions of fact for the trial, and do not amount to or establish a set of undeniable legal principles requiring the summary excision of the allegations from the amended statement of claim

CLAIMS FOR RELIEF

86                  Aurora and Transend argued that as no cause of action is pleaded against them, no relief could be granted against them and the claims against them should be dismissed or struck out.  This submission is hardly worthy of consideration.  These parties are Government-run companies which will be affected by some of the relief sought if it is granted.  If they were not parties, they would probably have to be added if only for this reason.  Nothing will be gained or saved by their immediate removal from the proceedings, not even legal costs as they are jointly represented with the other Tasmanian parties.  If at any time they decide that they do not wish to be heard in the proceedings, they may simply fade away and not speak.

87                  The Premier submitted that the application for an order under section 87 of the TPA that he take steps under section 10(2) of the EC Act to ensure that the HEC transfer its obligations to the applicant to Aurora and Transend, presumably so that they can carry them out, is not relief which the Court could or would grant on the facts alleged in the statement of claim.  Presumably he seeks that this part of the application be struck out or dismissed.  How this matter can be dealt with on a motion of summary relief, especially one which does not seek such an order, and why it should be, is not stated.  It is a submission which can only be made after the evidence proposed to be offered in support of such relief has been heard.

CONCLUSION

88                  Although the amended statement of claim is complex and not always easy to follow, and some of its contents are inelegantly phrased such as to require amendment, I have found no basis for striking it out summarily.  The respondents’ motions are dismissed with costs.

Associate:

Dated:              25 June 1999